Art as an alternative investment: how and why

In an interesting article, titled ‘Offbeat investments’ in The Business Line, Bhavana Acharya mentions of options other than stocks and bonds for investments. The article evaluates assets such as art and wine. It starts off, noting:

“You have just visited an art gallery and viewed some beautiful pieces. You may come across a gramophone at an antiques store. However, But if you’re not willing to buy these pieces because you would rather put your money in avenues, which will generate dividend or interest, think again. Among the more offbeat routes of portfolio diversification are art, sculptures, antiques and so on.”

The writer recommends alternative investment avenues for good gains. She clearly advocates a road beyond avenues of stocks and bonds, suggesting investments can be made in offbeat assets. Here is what the informative piece notes of art as an investment option.

· These investments will deliver returns in the form of capital gains alone, and not dividends or interest as stocks and deposits do.

· Investing in arts can be rather interesting, but it also demands sound judgment on your part. It needs research into different artists, their backgrounds and quality of their work.

· The art pieces must always be signed.

· The investments are not highly liquid and prices are not likely to shoot in the short term.

· Quality holds more importance than mere size while buying art. Bigger pieces are more difficult to maintain and retain.

· Assessing the quality of paintings or sculptures is not easy for a novice investor. So it is advisable to consult experts or enter art funds. Art funds invest in a mix of works by established as well as upcoming artists. SEBI requires art funds to be registered, but there is no benchmark to judge their value or performance.

· Importantly, buy what you like.

Last but not the least, while such alternative investments are novel, they require a tidy sum of money! Good art works and antique pieces come at a higher price.